Financial statements preparation that your bank, the ATO and you can rely on

Every company, trust and partnership needs a set of financial statements at the end of the year. Most owners see them once, sign the directors' declaration, and file them away. That's a waste. A good set tells you whether the business is making real money, where the cash went, what you owe yourself, and what your bank will think when you next ask for a loan.

Here's what financial statements are, which type you need, what a proper set contains, and how we prepare them.

What are financial statements, and who needs them?

Financial statements are the formal year-end summary of an entity's financial position and performance. At a minimum, that's a profit and loss statement (what you earned and spent), a balance sheet (what you own and owe at year end) and notes explaining the figures.

A proprietary company is large if it meets at least two of these three tests at year end: consolidated revenue of $50 million or more, consolidated gross assets of $25 million or more, or 100 or more employees. Everything else is small.

Special purpose or general purpose: which do you need?

This is the question most owners have never been asked.

• General purpose financial statements are prepared for users who can't demand tailored information, so they must follow the Australian Accounting Standards in full (or the Simplified Disclosures framework). Large proprietary companies, public companies and many larger entities need them.
• Special purpose financial statements are prepared for users who can ask for what they need: the owners, the ATO, your bank. They apply only the standards that are relevant to those users. Most small private companies, trusts and partnerships prepare these.

We read the deed, the constitution and your loan agreements before we decide. Getting this wrong can mean a breach of a loan covenant, or paying for an audit-level set of statements nobody needed.

What's included in a set of financial statements?

A typical BPAG set for a private company or trust includes:

1. Profit and loss statement. Income, cost of sales, gross profit and expenses, with this year beside last year.
2. Balance sheet. Assets, liabilities and equity at year end, including loan accounts with directors, shareholders, beneficiaries and related entities.
3. Notes to the financial statements. The accounting policies used and the detail behind key figures, such as borrowings, related-party loans and depreciation.
4. Directors' declaration or trustee declaration. The signed statement that the statements present fairly and, for a company, that it can pay its debts.
5. Compilation report. Our report confirming we compiled the statements from your information under the professional standard for compilation engagements, and what that means.
6. Depreciation schedule. Every asset, its cost, tax and accounting depreciation, and its written-down value.
7. Distribution or dividend statement, for trusts and companies paying dividends: who received what, and the franking.
8. Optional extras: a cash flow statement, a statement of changes in equity, and a short commentary with key ratios.

Key point: The balance sheet is where tax trouble hides. A shareholder loan account that grew during the year, an unpaid trust distribution owed to a company, or stock that doesn't match the count all point to tax issues that need fixing before the tax return goes in.

How does our three-year review work?

Before we finalise any set of statements, our annual financials review agent lays the current year beside the previous two and flags what needs a question. It looks for patterns a single-year review misses:

• Division 7A signals. A loan from the company to a shareholder or associate that has grown, wasn't repaid, or has no written agreement. Our Division 7A guide explains why this matters.
• Unpaid trust distributions to a corporate beneficiary that are piling up year after year.
• Prepayments and accruals that appear one year and vanish the next.
• Stock that doesn't move with sales, or gross margin that shifts without an explanation.
• Depreciation pool balances and assets that should have been written off.
• FBT exposure, such as cars in the balance sheet with no FBT return.
• Super contributions paid after year end and claimed in the wrong year, especially now that Payday Super has started.

The agent produces flags and questions, not conclusions. Your accountant decides what each flag means, asks you the questions that matter, and records the answer. Then the company tax return or trust return is prepared from statements that have already been tested.

What do lenders want to see in your financial statements?

When you apply for business finance, refinance or a lease, the lender usually asks for:

• Two years of signed financial statements for each entity in the group, plus the matching tax returns and notices of assessment
• Year-to-date management accounts if the last year end is more than a few months old
• An ATO statement of account or integrated client account showing you're up to date
• Details of related-party loans and guarantees

Lenders read the statements for what they say about repayment capacity: profit after adding back interest, depreciation and one-off items, and whether owners' drawings leave enough. They also look for red flags: losses, large loans to directors, ATO debt and declining equity.

Example: Say a café company made $180,000 profit before tax but the directors drew $160,000 through their loan accounts. On paper it's profitable; on the balance sheet, the directors owe the company money, Division 7A applies, and the bank sees cash leaving faster than it comes in. We'd fix the loan account treatment before the statements went to the bank, and explain the add-backs in a cover note so the lender sees the real picture.

If you're planning a loan, tell us early. We can prepare statements with the presentation lenders expect and, if it helps, a cash flow forecast to go with them.

How does financial statements preparation work with BPAG?

1. Year-end request. Our year-end records request agent builds your document list from last year's file, so you're asked only for what's relevant. You answer by SMS or email and upload from your phone.
2. Close the books. Bank accounts, credit cards and loans reconciled; payroll and super tied to Single Touch Payroll; GST reconciled to BAS lodgements.
3. Year-end adjustments. Accruals, prepayments, stock, depreciation, interest, loan accounts, and tax entries.
4. Three-year review. The agent flags patterns; your accountant asks the questions and resolves them.
5. Draft statements and a conversation. You get the draft with a short explanation of what changed and why. If you're on our Business Insights or Fractional CFO plans, we go through it on a call.
6. Sign-off. Directors or trustees sign on their phones, no account needed.
7. Tax return and next steps. The tax return is prepared from the final statements, and anything we'd change for next year is noted.

As with everything at BPAG, the AI agents draft and qualified accountants review and sign off. Every figure in the statements can be traced back to the transactions behind it.

What does financial statements preparation cost?

Annual financial statements for your company are included in all three of our fixed-price plans, starting with Compliance Essentials from $149 per week + GST, which also covers bookkeeping, BAS and the company tax return. Groups with several entities, or statements prepared without our bookkeeping, are quoted as a fixed fee once we've seen the books. Details are on our pricing page.

The honest point on cost: the price of year-end statements depends mostly on the state of the books. A Xero file reconciled every week takes far less work than a shoebox of statements. If your books are behind, it's often cheaper overall to have us keep them current during the year through our accounting and bookkeeping service.

What mistakes do we see in year-end accounts?

• Directors' loans used as a cash account, with no Division 7A agreement and no minimum repayment.
• Trust distributions recorded but never paid, building up as unpaid present entitlements over many years.
• Personal expenses coded to the business, which inflates costs and invites ATO questions.
• Assets on the balance sheet that the business sold or scrapped years ago.
• Statements prepared as general purpose because "that's what we always did", with disclosure costs the business didn't need, or the reverse.
• No signed declaration on file, which matters when a bank or buyer asks.

What should you send us?

• Access to your accounting file (Xero, MYOB or other)
• Last year's signed financial statements and tax returns
• Bank, credit card and loan statements at year end
• Stock count at year end, if you hold stock
• Details of assets bought or sold during the year
• Trust deed, company constitution and any loan agreements with covenants
• Anything you've been asked for by a lender

If you'd like a reminder of what else to have ready at year end, our EOFY tax tips cover the main ones.

General information only, current as at 18 October 2026. It is not personal tax, legal or financial product advice and doesn't take your circumstances into account. Talk to us before you act. Where a recommendation needs a licensed financial adviser or a solicitor, we work alongside them.